A look at the Morningstar Europe Index over the past decade shows how profoundly both the European economy and investor preferences have changed.
Both the top constituents and sector composition have evolved significantly. Defensive large-cap stocks that dominated the stock market in 2015 have given way to a more diverse mix of stocks that appeal to investors looking for a combination of growth and innovation.
Despite these gains, valuations in some sectors are looking appealing, Morningstar analysts say.
Morningstar Europe Index: Evolution of the Top Holdings
In 2015, Morningstar Europe Index’s top holdings were heavily concentrated in traditional defensive stocks. Nestlé NESN, Novartis NOVN, Roche ROG, HSBC HSBA, Bayer BAYN, Sanofi SAN, Total TTE, British American Tobacco BATS, BP BP., and GlaxoSmithKline GSK defined the index, highlighting Europe’s reliance on consumer staples, healthcare, and energy. These companies were prized for their stability and dividend reliability, characteristics valued during a period still marked by the aftermath of the financial and sovereign debt crises.
10 years on, the composition of the Morningstar Europe Index, a market capitalization weighted benchmark, looks markedly different. ASML ASML and SAP SAP, the two European technology leaders, have surged into top positions, signaling an investor preference for innovation-driven growth. The old guard—represented by the likes of AstraZeneca AZN, Nestlé, HSBC, Novartis, Roche, Shell SHEL, Siemens SIE, and luxury powerhouse LVMH MC—still follow close behind. While a substantial number of the older defensive names remain, their relative influence has declined. The rise of technology, luxury, and modern industrial stocks reflects European investors’ increasing appetite for global growth trends.
The European Stocks With Double-Digit Gains, ASML Out in Front
The impressive performance of Europe’s emerging champions explains much of this reshuffling. ASML delivered an extraordinary annualized return of 26% over the decade, making it one of the most successful global companies of the period. In the same period the Morningstar Europe Index has returned 6.5% annually.
LVMH recorded strong double-digit growth, as did SAP (11.5%), AstraZeneca, and Siemens, These returns sharply contrast with those of the traditional defensive giants, whose performances were notably weaker: Nestlé delivered has delivered 5.1% annualized returns, while Roche and Novartis have achieved similarly modest gains. This divergence highlights investors’ increasing preference for tech-led companies.
Sector Composition: From Defensive Dominance to Growth Orientation
The sector weights of the Morningstar Europe Index have also been transformed. Industrials expanded dramatically from around 11% of the index in 2015 to 20% in 2025. Technology also doubled its weight, from 4% to 8%, fueled by the success of ASML and SAP.
Meanwhile, formerly dominant defensive sectors declined sharply. Consumer defensive stocks fell from 13% to 9%, reflecting their slower structural growth and weaker shareholder returns. Consumer cyclical names also lost ground overall, despite the rise of LVMH, reflecting uneven performance across the category. Energy contracted from 7% to just 4%, while communication services and real estate also saw their weights reduced, in part due to their clear underperformance during these last 10 years. Together, these shifts illustrate a clear transition from the index’s defensive, low-growth index profile to a more dynamic and cyclically sensitive one.
Europe’s Key Strategic Stocks
The reconfiguration of the index underscores the rise of European global champions in technology, luxury, pharmaceuticals, and industrial engineering. ASML has become one of the world’s most strategically important companies, commanding a leading position in semiconductor manufacturing equipment. SAP remains central to global enterprise software infrastructure and is screening as undervalued. LVMH continues to dominate the luxury market, commanding pricing power unmatched in Europe.
Even within traditional sectors, differentiation has become crucial: AstraZeneca has benefited from a rich pipeline and a leading presence in the pharma and biotech industry on patent-protected drugs, while other large pharmaceutical firms have slowed.
Beyond these structural shifts, investors can still find attractive opportunities across both growth-oriented and defensive segments of the European market, Morningstar analysts say. Traditionally defensive names like Roche and Nestlé—both currently with a 4-star ratings—offer solid fundamentals at valuations that now appear appealing.
Where Next for European Stocks?
Looking ahead, European investors have a balanced set of opportunities as the broader outlook improves.
“The macroeconomic conditions are set up nicely for European equities in 2026, with inflation low and stable, interest rates at 2% and GDP growth edging upward. Valuations in areas like consumer defensive stocks, tech, and healthcare are looking particularly attractive,” says Michael Field, chief European markets strategist at Morningstar.
But Europe is facing some serious challenges in the next decade, he adds: Potential cuts to social programs to pay for increased defense spending, increased competition from China, and a growing need to cut red tape and improve growth.
“Structurally, things are shifting rapidly on a global scale. For European companies this means the picture is likely to look entirely different in another decade, with the outcome for many industries, like chemicals, being binary: Sink or swim,” Field says.
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